As we've discussed here more than once, the state of California really wants to show that it's committed to building more housing.
One package of rules related to this goal came in the form of SB 330 (2019), formally known as the Housing Accountability Act.
We focus today on one part of that law, informally called the "no net loss" rule.
The "no net loss" rule becomes highly relevant to people buying property for land value, with the goal of new development. If an existing site contains more than one habitable unit, each California city is required to make sure that any demolition and new build restores at least the same number of units as previously existed on site.
The basic, common-sense idea is that we're going to fail to expand the number of housing units in California if we allow people to, say, raze multiple units to build just one house.
Now, let's get local.
Manhattan Beach is filled with crusty old duplexes and triplexes dating back 60-100 years. They're usually quite undersized for what could be built on site now, and often worth a few to several million dollars for land alone.
One example is 116 9th St., on the market today at $5.950M. (Listed by Vincenzo Altamura, SC Real Estate.)
116 9th is either a 1970s triplex, or a flat plot of land with some old concrete foundation parts on it. Depends how you choose to look at it.
(How you look at it could be really important.)
Now, everyone can agree: That's a nifty location.
116 9th is steps to downtown, on a walkstreet corner, with only homes on The Strand in front.
What a great place to build your dream home!
Quick question: Is your dream home a triplex?
OK, probably not. (More on the options in a minute.)
Why do we keep calling this a triplex, when it's clearly a plot of all-but-vacant land?
Because, until a fire in 2022, there was a 1970s-vintage, ramshackle, even notorious, triplex at 116 9th, which fronts Ocean Drive.
Our sister site, MB News, in July 2022 carried news of the two-alarm, overnight fire at the location, and of the sad passing of a pet dog, Sunny, who had lived there.
The fire badly damaged the building, leading city officials to declare the structure uninhabitable. The owner apparently fought the matter for a while, before also passing.
The city of Manhattan Beach ultimately demolished the triplex.
You Can't Dodge the Law Like Steve Jobs
You might notice in the listing for 116 9th that it's described as a 5br/3ba, 2474 sqft. structure, even though nothing is there. This might be called hyper-compliance, or hyper-disclosure, in the listing.
Potential buyers may as well know now: The city won't entertain any argument to suggest that 116 9th doesn't need to be replaced with three units, just because they ripped the old building down. They still "see" the triplex.
Neither the city nor the state can allow a case of "scorched earth" to undermine the basics of the law. Otherwise, you'd have people torching multi-unit buildings all over California in order to bring them back to their prior condition as vacant land, so they could argue that SB 330 doesn't apply.
"4-plex? What 4-plex? I don't see any 4-plex? Do you? I just want to build my house on this empty lot right here."
We're reminded of the story about Apple co-founder Steve Jobs' former property in Woodside, CA, on the edges of Silicon Valley.
Way back in 1984, when he was young and just pretty successful, Jobs acquired a landmark 17,250-sqft. house – a 1925 build – along with its 6 acres in Woodside. He later hoped to flatten the Spanish Revival estate to replace it with something new, but more modest in scale. (Photo above: Jonathan Haeber, used with permission.)
Woodside authorities and preservationists refused to let Jobs demolish the house, citing its historic significance based on age, style and prior ownership.
By the year 2000, Jobs simply stopped maintaining the home, allowing it to be freely battered by the elements. His attitude may have been summarized as, "Preserve this!" (Jobs was not known for a patient or genial manner.)
A decade later, the abandoned house was degraded. The Woodside Town Council approved the demolition in 2011, and Jobs ordered it. Alas, neither he, nor the home, survived that year.
The point of this story is that Steve Jobs may have pulled an end-around on historic-preservation regs with his "back to nature" tactic, but don't get any ideas. You can't do the same sort of thing now to undercut state laws on housing density. Don't even bother trying it. (Also, you don't want to wind up like he did right after he "won.")
What Can You Build at a Former Triplex?
With the caveat that this blog is not your lawyer, your architect, your city planning department, nor even the listing agent for 116 9th, we can tell you what we've seen and heard.
All over town – particularly in the Sand Section – people are redeveloping lots that once hosted duplexes by incorporating a "junior ADU" (alternative dwelling unit) into the home design. You don't need to replace a little duplex with a little duplex, or a big duplex, or two townhomes. You can build effectively a single-family home that dominates the square footage, then add in a smaller second unit.
To comply with the regs, the unit will typically need its own kitchen and its own entrance, but no one can compel you to actually rent it out (remember! not your lawyer here!). The Jr. ADU might function as a home office, or guest unit, or something else.
Replacing a triplex poses some greater challenges, because you'll likely need the Jr. ADU and another ADU. Here, the state regs on ADUs are helpful, in that they do not require parking for ADUs despite their being dwelling units, most clearly when there is qualifying transit nearby (as we have in many parts of town). (Still not your lawyer...)
The folks selling 116 9th have gamed out some ideas along those lines, although it'll be up to the buyer to make their own formal investigations and plans.
And there's one possibility that might be just a minute premature.
There's a new build at 120 9th. In concept, whoever owns that could try to protect their views and buy a yard for $6M.
The city could not make anyone build any structure on 116 9th, even though the city took down the (damaged) 3 units.
That's no loophole, exactly, but it is a way that the city could wind up losing a net of 3 units in the end.
